California high-speed rail project wins big in appellate court ruling

By Jessica Calefati jcalefati@bayareanewsgroup.com

Posted:
08/01/2014 06:15:09 AM PDT

Updated:
08/01/2014 06:15:37 AM PDT

SACRAMENTO -- In a huge victory for Gov. Jerry Brown, a panel of appellate court judges Thursday gave its blessing to the state's bullet train funding plan, paving the way for California to sell $8.6 billion in bonds it needs to construct the controversial San Francisco-to-Los Angeles rail line.

Opponents of the train had argued that the state needed to show how it would pay for the $68 billion project before it begins construction -- and with only a fraction of that funding in hand, doing so would have been impossible.

A Sacramento Superior Court judge late last year shocked high-speed rail officials when he ruled in favor of Kings County farmers and residents who had filed suit against the state to stop the bullet train. But in a unanimous decision issued late Thursday afternoon, the 3rd District Court of Appeal's three-judge panel ordered Judge Michael Kinney to vacate his decision.

"Substantial financial and environmental questions remain to be answered" by the California High-Speed Rail Authority, the state appellate court judges wrote. "But those questions are not before us today."

Attorneys for the state had sought an expedited ruling from the Court of Appeal because Kinney's decision imperiled both the project's state and federal funding.

The latest development now sets the stage for a possible state Supreme Court challenge, though an attorney for the project's opponents said Thursday night that his clients had not decided yet whether to seek an appeal.

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In a decision the appellate court judges call "quite narrow," they found the rail authority's finance committee acted properly last year when it voted to approve the issuance of bonds and called Kinney's scrutiny of the committee's work "highly unusual." The state had asked for pre-approval from the Superior Court to sell the bonds to avoid any future legal challenges.

The appellate judges also refused to force the Legislature to rescind and redo a bullet train funding plan it approved several years ago that was at the heart of the opposition's case for killing the project.

"Because the Legislature appropriated bond proceeds following receipt of the preliminary funding plan approved by the Authority, the preliminary funding plan has served its purpose," the judges wrote.

"The High-Speed Rail Authority has always been committed to building a modern high-speed rail system that will connect the state, precisely as the voters called for when they passed Proposition 1A" in 2008, Richard said. "The system will be a clean, fast, non-subsidized service, and will create jobs and enable smart, sustainable growth while preserving farmland and habitat."

But attorney Stuart Flashman, who represents the Kings County farmers and residents, called Thursday's court decision "a very bad ruling" that undermines the state's initiative process.

The approval of Proposition 1A gave the state the ability to sell $10 billion in bonds to get the high-speed rail line started. To access the money, the state must meet a long list of strict standards laid out in the text of the ballot measure.

"The point of this (lawsuit) was to prevent the state from moving forward and starting construction on a project they couldn't finish," Flashman said. "Today, the court reduced the requirements of the ballot measure to something that's meaningless -- and that's not what voters intended."

Instead of deciding whether the state had, in fact, violated Proposition 1A as the project's opponents claimed, the appellate judges ruled that the contentious funding plan was valid regardless because the state Legislature approved it.

"The authority went right around the requirements agreed upon by the voters, and they got away with it," Flashman said. "For political reasons, the Legislature made this approval, and now the court is saying there's nothing we can do about it."

Although Flashman said his clients had not decided whether to appeal to the state's highest court, observers of the legal battle over the bullet train's funding say an appeal is likely.

Thursday's court ruling comes almost two months after Brown brokered a budget deal that guarantees the rail line its first funding stream through fees collected from the state's biggest polluters. Within the next few years, leading economists say, bullet train funding could reach about three-quarters of a billion dollars a year.

Still, questions remain about the state's ability to obtain more construction funding from a skeptical Congress, and several other legal challenges remain unresolved. But private companies recently have begun expressing interest in the project -- which only several months ago seemed to be on life support.